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Objective – Measurement of the incidence of health financing contributions across socio-economic groups has proven valuable in informing health care financing reforms. However, there is little evidence as to how to carry out financing incidence analysis (FIA) in lower income settings. We outline some of the challenges faced when carrying out a FIA in Ghana, Tanzania and South Africa and illustrate how innovative techniques were used to overcome data weaknesses in these settings.

Methodology – FIA was carried out for tax, insurance and out-of-pocket (OOP) payments. The primary data sources were Living Standards Measurement Surveys (LSMS) and household surveys conducted in each of the countries; tax authorities and insurance funds also provided information. Consumption expenditure and a composite index of socio-economic status (SES) were used to assess financing equity. Where possible conventional methods of FIA were applied. Numerous challenges were documented and solution strategies devised.

Results – LSMS are likely to underestimate financial contributions to health care by individuals. For tax incidence analysis, reported income tax payments from secondary sources were severely under-reported. Income tax payers and shareholders could not be reliably identified. The use of income or consumption expenditure to estimate income tax contributions was found to be a more reliable method of estimating income tax incidence. Assumptions regarding corporate tax incidence had a huge effect on the progressivity of corporate tax and on overall tax progressivity. LSMS consumption categories did not always coincide with tax categories for goods subject to excise tax (e.g. wine and spirits were combined, despite differing tax rates). Tobacco companies, alcohol distributors and advertising agencies were used to provide more detailed information on consumption patterns for goods subject to excise tax by income category. There was little guidance on how to allocate fuel levies associated with ‘public transport’ use. Hence, calculations of fuel tax on public transport were based on individual expenditure on public transport, the average cost per kilometre and average rates of fuel consumption for each form of transport. For insurance contributions, employees will not report on employer contributions unless specifically requested to and are frequently unsure of their contributions. Therefore, we collected information on total health insurance contributions from individual schemes and regulatory authorities. OOP payments are likely to be under-reported due to long recall periods; linking OOP expenditure and illness incidence questions – omitting preventive care; and focusing on the last service used when people may have used multiple services during an illness episode. To derive more robust estimates of financing incidence, we collected additional primary data on OOP expenditures together with insurance enrolment rates and associated payments. To link primary data to the LSMS, a composite index of SES was used in Ghana and Tanzania and non-durable expenditure was used in South Africa.

Policy implications – We show how data constraints can be overcome for FIA in lower income countries and provide recommendations for future studies.

This chapter sheds light on long-term trends in the level and structural dynamics of investments in Russian human capital formation from government, corporations, and households. It contributes to the literature discussing theoretical issues and empirical patterns of modernization, human development, as well as the transition from a centralized to a market economy. The empirical evidence is based on extensive utilization of the dataset introduced in Didenko, Földvári, and Van Leeuwen (2013). Our findings provide support for the view expressed in Gerschenkron (1962) that in late industrializers the government tended to substitute for the lack of capital and infrastructure by direct interventions. At least from the late nineteenth century the central government's and local authorities' budgets played the primary role. However, the role of nongovernment sources increased significantly since the mid-1950s, i.e., after the crucial breakthrough to an industrial society had been made. During the transition to a market economy in the 1990s and 2000s the level of government contributions decreased somewhat in education, and more significantly in research and development, but its share in overall financing expanded. In education corporate funds were largely replaced by those from households. In health care, Russia is characterized by an increasing share of out-of-pocket payments of households and slow development of organized forms of nonstate financing. These trends reinforce obstacles to Russia's future transition, as regards institutional change toward a more significant and sound role of the corporate sector in such branches as R&D, health care, and, to a lesser extent, education.

Objective – The aim of the paper is to bring evidence and lessons from two low- and middle-income countries (LMIs) of the former USSR into the global debate on health financing in poor countries. In particular, we analyze the introduction of social health insurance (SHI) in Kyrgyzstan and Moldova. To some extent, the intent of SHI introduction in these countries was similar to that in LMIs elsewhere: increase prepaid revenues for health and incorporate the entire population into the new system. But the approach taken to universality was different. In particular, the SHI fund in each country was used as the key instrument in a comprehensive reform of the health financing system, with the new revenues from payroll taxation used in an explicitly complementary manner to general budget revenues. From a functional perspective, the reforms in these countries involved not only the introduction of a new source of funds, but also the centralization of pooling, a shift from input- to output-based provider payment methods, specification of a benefit package, and greater autonomy for public sector health care providers. Hence, their reforms were not simply the introduction of an SHI scheme, but rather the use of an SHI fund as an instrument to transform the entire system of health financing.

Methodology/approach – The study uses administrative and household data to demonstrate the impact of the reforms on regional inequality and household financial burden.

Findings – The approach used in these two countries led to improved equity in the geographic distribution of government health spending, improved financial protection, and reduced informal payments.

Implications for policy – The comprehensive approach taken to reform in these two countries, and particularly the redirection of general budget revenues to the new SHI funds, explain much of the success that was achieved. This experience offers potentially useful lessons for LMIs elsewhere in the world, and for shifting the global debate away from what we see as a false dichotomy between SHI and general revenue-funded systems. By demonstrating that sources are not systems, these cases illustrate how, in particular by careful design of pooling and coverage arrangements, the introduction of SHI in an LMI context can avoid the fragmentation problem often associated with this reform instrument.

A common observation is that both single- and multi-payer health care systems will achieve lower overall costs if they use primary care gatekeeping. Questioning this common wisdom, we focus on the health care access system, that is, the way in which patients gain access to health care. Gatekeeping, the use of primary care providers to control access to more specialized physician and hospital services, has come under intense scrutiny in the United States and in Europe. The few international comparative studies that have focused on the issues of quality of care, cost containment, and patient satisfaction find weak or no support for common assumptions about gatekeeping. Hence, we examine the institutional environments in seven countries in order to: (a) define and categorize health care access systems; (b) identify the components of a health care access system; (c) explore the notion of a strategic fit between health care financing systems and access system configurations; and (d) propose that the health care access system is a key determinant of process-level cost efficiency. Drawing upon institutional and governance theories, we posit that the structure and organization of an access system is determined by how it addresses six essential questions: Who is covered? Which services are included? What are the points of access? How much time elapses before access? What are the ways of selecting among points of access? and Are services and their quality the same for everyone? This analytical framework reveals that national health care access systems vary the most in their points of access, access times, and selection mechanisms. These findings and our explanations imply that access systems are one of the only tools for demand management, that any lasting change to an access system typically is implemented over an extended time period, and that managers of health care organizations often have limited freedom to define governance structures and shape health care service production systems.

As all countries in the world, Polish health care system has to challenge four fundamental transformations: demographic, technological, epidemiological and cultural. Each of them generates serious threats for the sustainability of the system. The Polish society is ageing even faster than other in the European Union. For the sustainability of the system, the ageing of the population is a double challenge: on the expenditure side and on the financing side.

The Polish health care system is characterised by three negative features: under-financing of health care, misguided organisation of the health sector and health care entities and a dramatic shortage of health care professionals. The share of GDP devoted to health has remained constant over the last years at the level of 6.3%–6.7%. Poland has one of the lowest rates of practicing doctors and nurses in the EU countries. Lack of attractiveness of the medical professions caused by consistently low wages has created a huge generation gap.

Looking from the perspective of cost-effectiveness, we must to state, that the system, with its small financial outlays, provides a relatively high level of health for the population. However, it does not mean that better results could not be achieved. The majority of the public hospitals run in the form of independent public health care units that are highly inefficient and indebted. All attempts to restructure the sector and to solve the problem of arrears of the public hospitals failed so far.

To face the challenges, Poland must change its health policy. An increase in the sector's financing is needed, bearing in mind that increasing outlays alone is certainly not enough to solve all problems and secure sustainability. Deep structural and organisational changes are necessary. Unfortunately, politicians avoid making difficult but necessary decisions, e.g., drastic restructuring of the hospital sector, preferring above all to increase public spending on health.

The first section of this volume is concerned with the changing context for health financing in developing and transitional countries. Two chapters address contemporary issues. The first, by Cristina Gutiérrez-Delgado and Veronica Guajardo-Barrón, describes the challenges created by the “double burden” of disease in low- and middle-income countries created by the coexistence of the persistent burden of communicable disease with emerging problems of chronic and non-communicable illness. Drawing on the Mexican experience of expanding needs for anti-retroviral therapy, renal replacement therapy, and screening and prevention of cervical cancers, they present new evidence about the burden placed by these conditions on public health budgets. They also show the potential value of adopting a risk factor approach to economic evaluation of chronic disease management, presenting estimates of the financial burden imposed by four diseases strongly associated with overweight and obesity. They conclude that strengthened stewardship functions, including generating data about disease burdens and expenditure, and greater use of explicit priority setting processes, are needed to help resolve the tensions between equity and efficiency.

Evidence from developed countries shows debt and bankruptcy to be correlated with medical expenditures. In Mexico, the formal financial sector does not lend for health needs. So, the solution is often found by borrowing from relatives, friends, and moneylenders, or pawning belongings after using savings, if any. Despite the recent and growing literature on income and health, and health financing, we have not come across a single study analyzing pawning and health. Our study fills this gap using a sample of 400 government owned pawnshop users from Puebla, Mexico. The findings from the study revealed that health expenditures are a significant reason for pawning and having medical insurance does not reduce the probability to pawn. Also, catastrophic health expenditures are correlated with a higher probability of not redeeming the pledge. We found that most pawnshop users have low income and losing a pledge is positively correlated with low or middle income and the number of people in the household.

Objective – The implications of social health insurance (SHI) for labor markets have featured prominently in recent debates over the merits of SHI and general revenue financing. It has been argued that by raising the nonwage component of labor costs, SHI reduces firms’ demand for labor, lowers employment levels and net wages, and encourages self-employment and informal working arrangements. At the national level, SHI has been claimed to reduce a country's competitiveness in international markets and to discourage foreign direct investment (FDI). The transition from general revenue finance to SHI that occurred during the 1990s in many of the central and eastern European and central Asian countries provides a unique opportunity to investigate empirically these claims.

Methodology/approach – We employ regression-based generalizations of difference-in-differences (DID) and instrumental variables (IV) on country-level panel data from 28 countries for the period 1990–2004.

Findings – We find that, controlling for gross domestic product (GDP) per capita, SHI increases (gross) wages by 20%, reduces employment (as a share of the population) by 10%, and increases self-employment by 17%. However, we find no significant effects of SHI on unemployment (registered or self-reported), agricultural employment, a widely used measure of the size of the informal economy, or FDI.

Implications for policy – We do not claim that our results imply that SHI adoption everywhere must necessarily reduce employment and increase self-employment. Nonetheless, our results ought to serve as a warning to those contemplating shifting the financing of health care from general revenues to a SHI system.

Objective – This chapter assesses health equity achievements of the Thai health system before and after the introduction of the universal coverage (UC) policy. It examines five dimensions of equity: equity in financial contributions, the incidence of catastrophic health expenditure, the degree of impoverishment as a result of household out-of-pocket payments for health, equity in health service use and the incidence of public subsidies for health.

Methodology – The standard methods proposed by O’Donnell, van Doorslaer, and Wagstaff (2008b) were used to measure equity in financial contribution, healthcare utilization and public subsidies, and in assessing the incidence of catastrophic health expenditure and impoverishment. Two major national representative household survey datasets were used: Socio-Economic Surveys and Health and Welfare Surveys.

Findings – General tax was the most progressive source of finance in Thailand. Because this source dominates total financing, the overall outcome was progressive, with the rich contributing a greater share of their income than the poor. The low incidence of catastrophic health expenditure and impoverishment before UC was further reduced after UC. Use of healthcare and the distribution of government subsidies were both pro-poor: in particular, the functioning of primary healthcare (PHC) at the district level serves as a “pro-poor hub” in translating policy into practice and equity outcomes.

Policy implications – The Thai health financing reforms have been accompanied by nationwide extension of PHC coverage, mandatory rural health service by new graduates and systems redesign, especially the introduction of a contracting model and closed-ended provider payment methods. Together, these changes have led to a more equitable and more efficient health system. Institutional capacity to generate evidence and to translate it into policy decisions, effective implementation and comprehensive monitoring and evaluation are essential to successful system-level reforms.

Objective – The first wave of experiences of exemptions policies suggested that poverty-based exemptions, using individual targeting, were not effective, for practical and political economic reasons. In response, many countries have changed their approach in recent years – while maintaining user fees as a necessary source of revenue for facilities, they have been switching to categorical targeting, offering exemptions based on high-priority services or population groups. This chapter aims to examine the impact and conditions for effectiveness of this recent health finance modality.

Methodology/approach – The chapter is based on a literature review and on data from two complex evaluations of national fee exemption policies for delivery care in West Africa (Ghana and Senegal). A conceptual framework for analysing the impact of exemption policies is developed and used. Although the analysis focuses on exemption for deliveries, the framework and findings are likely to be generalisable to other service- or population-based exemptions.

Findings – The chapter presents background information on the nature of delivery exemptions, the drivers for their use, their scale and common modalities in low-income countries. It then looks at evidence of their impact, on utilisation, quality of care and equity and investigates their cost-effectiveness. The final section presents lessons on implementation and implications for policy-makers, including the acceptability and sustainability of exemptions and how they compare to other possible mechanisms.

Implications for policy – The chapter concludes that funded service- or group-based exemptions offer a simple, potentially effective route to mitigating inequity and inefficiency in the health systems of low-income countries. However, there are a number of key constraints. One is the fungibility of resources at health facility level. The second is the difficulty of sustaining a separate funding stream over the medium to long term. The third is the arbitrary basis for selecting high-priority services for exemption. The chapter therefore concludes that this financing mode is unstable and is likely to be transitional.